What is Valuation?
What a business is estimated to be worth, often set during fundraising.
A company's valuation is the price the market (or an investor) puts on the whole business. When you raise money, the valuation determines how much equity you give up for the cash: $1M raised at a $10M valuation costs you 10%.
For startups, valuation is often less about current profit and more about expected future growth — which is a polite way of saying it's part math, part story, part vibes.
'Pre-money' valuation is the value before the new investment; 'post-money' is after. The difference is exactly the money raised.
Related terms
Definitions from the Business Dog Glossary — educational, occasionally satirical, never financial advice.